Business Finance 12

Question 1

It is very expensive source of financing and should be avoided because of the high interest rate.

Answer 1

Informal lending “5-6

Question 2

It is a source of funds which you need to create a good relationship by paying obligation on time and avail of credit term.

Answer 2

Supplier Credit

Question 3

Which is the income earned on a bond?

Answer 3

Interest

Question 4

This refer to the issuance of new shares of stock and retained earnings plowed back into the operation of the company.

Answer 4

Equity Financing

Question 5

Mr. Toga has a savings of Php 500,000. She bought equity on Deep Loms. Co., which make him a part owner of the business. What investment type was presented ?

Answer 5

Stocks

Question 6

This financing creates a contractual obligation for the borrower to pay the interest and the principal.

Answer 6

Bank

Question 7

It is a financial organization owned and controlled by its member, who can borrow at low interest.

Answer 7

Credit Cooperative

Question 8

It is a profit paid out to shareholder, but it can also be re-invested back into the company for growth purposes.

Answer 8

Retained Earnings

Question 9

Financial institution which performs deposit and lending function.

Answer 9

Bank

Question 10

Ms. Keri Koto, is the breadwinner of their family. Her priority is to provide for them and secure their future even
if an unforeseen situation happens. What kind of investment would ypu suggest to Ms. Keri Koto?

Answer 10

Insurance

Question 11

Which of the following is not an example of a deposit investment?

Answer 11

Current

Question 12

The person that manages a person’s mutual fund

Answer 12

Broker

Question 13

These payments are needed to maintain an insurance account.

Answer 13

Premium

Question 14

It is a source of fund which you need to be a member first before you can borrow money at a very low interest rate.

Answer 14

Credit Cooperative

Question 15

What do you call an owner of a company’s stocks ?

Answer 15

Stockholder

Question 16

What is the income earned on a stock?

Answer 16

Dividend

Question 17

What is the strategy to earn short-term income from stocks?

Answer 17

Buy low, sell high

Question 18

These are tangible assets held as investments.

Answer 18

Hard Assets

Question 19

What is the income earned on a building?

Answer 19

Rent

Question 20

If you wish to keep your savings in a bank and want to maximize its earning and intend to withdraw after one year, which type of bank deposit you must avail ?

Answer 20

Time - deposit

Question 21

It is a particular deduction that shields portion of tax payer income for taxation.

Answer 21

Tax shield

Question 22

Which statement is TRUE about the disadvantage of investing into a real estate?

Answer 22

Maintenance needed

Question 23

A 20% interest rate per month can translate into how many percent interest rate in a year.

Answer 23

240

Question 24

Which of the following statements are NOT TRUE ?

Answer 24

Banks are regulated by PDIC

Question 25

An investment that is made up of a pool of funds collected from many investors for the purposes of investing in stocks, bonds, and similar assets.

Answer 25

Mutual Funds

Question 26

Land and any improvements on it.

Answer 26

Real estate

Question 27

Type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earning.

Answer 27

Stocks (Equity)

Question 28

A contract (policy) in which an individual or entity receives financial protection or reimbursement against
losses from an insurance company.

Answer 28

Insurance

Question 29

Money placed into a banking institution for safekeeping

Answer 29

Bank Deposits (Fixed Income)

Question 30

A. Disadvantage : On some of traditional plans, no sickness/death until a certain age may mean not getting any benefits at all.

Answer 30

Insurance

Question 31

B. Advantage: Shorter, if any, holding period vs. bonds.

Answer 31

Bank Deposits (Fixed Income)

Question 32

C. Advantage: Can be a source of recurring rental income.

Answer 32

Real Estate

Question 33

D. Disadvantage: Riskiest of all assets (can lose as much as 50% of their money in one day)

Answer 33

Stocks (Equity)

Question 34

E. Disadvantage: Pay management fees.

Answer 34

Mutual Funds